If You Do Medicare Sign-Up Wrong, It Will Cost You

Tony Farrell turned 65 four years ago — the age when most people shift their health coverage to Medicare. But he was still employed and covered by his company’s group insurance.

When his birthday came around, he began researching whether he needed to move to Medicare, and determined he could stick with his employer’s plan, said Mr. Farrell, a marketing and merchandising executive for specialty retailers. At the time, he was working for a company that makes infomercials in San Francisco.

Four months later, Mr. Farrell was laid off, but he kept the company’s health insurance for himself and his family under the Consolidated Omnibus Budget Reconciliation Act (Cobra), the federal law that allows employees to pay for coverage as long as 36 months after a worker leaves a job.

“I just thought, this is great — the coverage won’t change,” he recalled. “I was just relying on my own logic and experience, and felt that if I didn’t need a government service, I wouldn’t sign up for it.”